Google Wallet Takes a Ride with NJ Transit

Google has found its first public transportation partner for Google Wallet, the mobile app that turns a smartphone into a virtual credit card.

The program, which started this week, is limited to commuters who own a Sprint Nexus S 4G, an Android smartphone that carries the requisite chip necessary for contactless payment. Commuters must have an account with Citi MasterCard or a Google Prepaid card.

Also, the number of places from which commuters can buy tickets is limited to several transportation hubs and bus routes. This Digits reporter visited one such hub, New York’s Penn Station, where a row of ticket-dispensing terminals advertised that customers could use their contactless credit cards. Small signs above the smart card reader indicated that Google Wallet was also accepted.

Alas, no one presented a Nexus smartphone, although two commuters attempted, in vain, to get the terminal reader to recognize their credit cards. An NJ Transit customer representative working at Penn Station said so far no one has asked about Google Wallet, before admitting that he has only heard about the program through a press release.

Despite the limitations of the current partnership, both Google and NJ Transit sees see the potential.

“Transit is the fastest way to accelerate adoption and reach usage density in major urban centers by habituating the behavior of tapping and paying with phones,” said Stephanie Tilenius, Google vice president of Commerce in a press release, “and we’re excited to launch our transit effort here with NJ Transit.”

According to the NJ Transit Web site, the system supports more than 895,000 weekday trips via 240 bus routes and 15 light rail and commuter rail lines.

Jim Weinstein, executive director of NJ Transit, told Digits that the idea of commuters paying for a ride by waving or tapping their phone against a card reader fits into the organization’s philosophy of making payment as “painless” as possible. “The more quickly we can deal with fare transactions, the better it is for everyone,” he said.

Weinstein said that NJ Transit originally contacted Google about the arrangement. A recent customer survey showed that a vast majority of commuters carried cell phones, with more than half of that number owning smartphones. “The number is just going to get larger,” he said.

The potential to turn smartphones into ‘digital wallets’ has attracted a number of players–from technology payment firms such as PayPal and Square to financial institutions, all eager for a slice of the pie. Mobile operators, in particular, have been hungry to create new opportunities for revenue outside of cell phone contracts.

A technology called near field communication, or NFC, which can transmit data over short distances, has been seen as seen as one solution for device makers. Smartphones installed with an NFC chip can “talk to” NFC terminals.

The mobile app Google Wallet uses a smartphone’s built-in NFC chip. Users complete a transaction by tapping their phones against an NFC terminal. Google’s system launched last summer starting in New York and San Francisco. Vendors which accept Google Wallet payments include Bloomingdale’s, Macys, RadioShack and Walgreens.

Google is working to partner with additional card companies. It is also working with device makers to support more Android devices with NFC capabilities.